How a 38-Year-Old Replaced His Job Income With Rentals (After Almost Giving Up)

In my Investor Profile Series, I use a question & answer format to share the stories of actual real estate investors at different stages of their investing careers.

Today’s investor profile is about Anthony Petz, a real estate investor from Bellingham, Washington. I have gotten to know Anthony very well through a multi-year real estate mastermind group. As a result, I have so much respect for him as an investor and a person.

But I learned something from this profile that I never knew about Anthony. He almost gave up after trying hard but finding little success in real estate for 5 years! But thankfully he stuck with it, started buying properties, and eventually replaced his job income with rental income well before his 38th birthday.

There are so many gems in the story you’ll read below. I hope you enjoy getting to know Anthony as much as I have.

Now I’ll turn it over to Anthony …

Personal

Anthony and the rest of the Petz family in beautiful Washington state.

Name:

Anthony Petz

Age:

38

Your home location:

Bellingham, WA

Career/Source of regular income:

[Chad: Notice the variety of roles Anthony has played in real estate. To be a full-time investor, as he has, you have to adapt your activities with changing times in order to still produce active income. All strategies don’t work all the time.]

What hobbies do you enjoy? What do you do for fun?

I play a lot of basketball and hangout with my kids and wife. I also like boating in the San Juan islands, and I love to travel to new and unfamiliar places. Finally, I like being with people I enjoy being around.

[Chad: We’ve got to play some ball together sometime, Anthony! I’ll rebound and hustle, and you can score all our points:)]

A fun/interesting/little known fact about you?

My ambition is fueled by my laziness.

[Chad: Ha, ha. I love this one. I have a feeling your laziness doesn’t look the same as other people’s. If lazy is spending time with your family, boating in the San Juan islands, and playing basketball – I’ll take it too!]

Financial Independence/Retirement Plans

Quality time – what financial independence is all about for AnthonyMore quality time

Do you have plans for financial independence/retirement? Or have you already reached financial independence?

I am technically financially independent through my real estate. My investments would provide enough income for me to cover my fair share of the household/family expenses but we would still need my wife’s income to support our current lifestyle. I’m working on replacing her income through the investments as well. Once I’ve done that, retirement will be a stronger consideration.

[Chad: Anthony’s situation reminds me a lot of semi-retirement – one of the stages I discuss in the article Financial Independence – The Peak and Plateaus of Retirement. Technically his wife still needs to work to support their full lifestyle. But there’s no doubt Anthony and the entire family are in a much more relaxed, enjoyable place because of their passive rental income. I’ve often thought that semi-retirement has been as enjoyable for me as full financial independence.]

What does financial independence mean to you? Why do you want to achieve retirement/financial independence? What kind of activities and projects will you spend more time on?

Freedom of time and how I choose to spend it is what being financially independent is about for me. Most of us make choices about how to spend much of our time based out of necessity (money for food, shelter, beer, etc.). If I spend my day working, I want it to be because I want to, not because I feel like I have to.

Already, having replaced my earned income with passive income, I’m able to go about my day without pressure or concern. Money I earn is simply improving the situation at this point. So, once I get the second goal of replacing my wife’s income I might keep working some but I’ll probably vacation a bit more. I’ll definitely just hangout more. I might make friends with the old guys that go out for coffee and see what they have to say.

[Chad: “spend my day working because I want to, not because I feel like I have to.” I think that pretty much sums it up for a lot of us. Well said Anthony! And I think that would be fun to be the 40 year old sitting at the table with the 70 year olds chatting and drinking coffee every morning. Lol]

If you had to start over and wanted to become financially independent, what’s the most important thing you would focus on?

Probably go bigger. I’d try harder to leverage into larger projects more quickly. Perhaps even get under someone’s wing that could teach me more about commercial real estate and development. The reason I think I might do that is because no matter what you’re doing you’re just learning the rules of a game. Might as well get good at a game that presents the largest upside. That being said, I feel pretty great about my little corner of the real estate world and don’t have any regrets about it.

[Chad: I love this discussion because there’s no right or wrong. But playing the devils advocate, I’d say Antony’s choice to “go small” by doing little properties, one deal at a time paid many hidden dividends (as it also has for me). When you go big, it’s easier to get caught in that conveyor belt that continually goes up and up and up. How do you get off and enjoy life? I think it’s much harder psychologically and practically. When going small satisfies your financial needs, why do more? The only reason I can see is just to have a new, interesting challenge. In that case you can go big AFTER you’ve already made it small. But it will be on completely different terms (that is – on YOUR terms).]

Real Estate Investing

Anthony training a next generation real estate investor!

Why do you like real estate investing?

Provides for a basic human need

Can improve a community

It is a tangible asset that you can control

Tax benefits

Highly leverageable

Provides lucrative income/residuals and appreciation simultaneously

It involves people and interaction

Allows for creativity

Can be part time or full time (or virtually passive)

What makes real estate investing most beneficial?

I’ve benefited from the ability to capture residual income and appreciation. It has been a game changer for my life.

Can you describe your approach to real estate investing? For example, do you do flips, rentals, house hacks, wholesaling, notes, or more than one? And what niche(s) and type of properties do you buy?

I’ve done and do most of the approaches mentioned almost exclusively in single family homes and small multi family in my city of Bellingham, WA. I’d say I’ve seen the most success in the pursuit of my goals in purchasing 1-2 unit properties with interest only owner contracts and low down payment requirements.

How did you get started? How did you get the money? Did you have any help?

To start I just skimped and saved to get money in the bank. On almost every property I’ve purchased I used either a line of credit, private money or 0% home depot card for down payment and/or rehab money.

I would say the biggest thing that fueled my buying fire was finding private lenders willing to lend in second position for down payment and rehab money while having the seller carry a first position loan on the property. This allowed me to keep my money for food and shelter without having to slow down my buying.

I’d like to note that I always felt confident that I had sufficient cash flow and equity to cover any debt I incurred and never borrowed money I wasn’t 100% confident I could cover the debt service on and payback. In other words, I was highly leveraged but not overleveraged.

[Chad: I used a very similar approach to get started. Over time I’ve used profits from rental income and flips to pay off those second mortgages. But they allowed me to buy good deals when I had little capital in the beginning. Anthony’s point about cash flow is VERY important. For example in my case, the second mortgage was often 70-75% loan to value, and the rental income above my mortgage payments gave us a lot of room for error.]

What were the biggest obstacles you faced when starting? How did you overcome them?

Finding deals that fit my conservative criteria. It can be difficult and frustrating trying to find deals with solid fundamentals at times. I overcame that by constantly seeking answers and education and by being persistent in my pursuit.

It probably took me 5 years of long hours and very hard work with very little reward in real estate before things took off. Honestly, I was on the verge of giving up just before everything finally came together. You never know when the missing component is going to click but an unrelenting dedication to your goals has to be met with results eventually. I always felt that if someone else could do it, I could do it.

[Chad: I think this is one of the best take-aways any of us could hear. Anthony didn’t find success right away. In fact he struggled and faced frustration for 5 years! How many of us would stick with it that long? How many of us complain when it doesn’t work the first time, the second time, or the third time we try something? I admire Anthony’s unrelenting persistence and vision to stick with it. ]

What % of your net worth (roughly) is in real estate?

I’m almost exclusively invested in real estate in Bellingham, WA. It’s not a part of my long term plan but in the short term I am focused on what is getting me to my destination the quickest.

What other types of assets do you invest in? Why? How do they fit with/complement real estate investments?

Probably the main one is promissory notes through direct lending. It’s hugely beneficial to have the investment background when lending on real estate investments.

Real Estate Deal

What’s the best or most memorable real estate deal you’ve made? Why?

Hmmmm, that’s a toughy. Lots come to mind for different reasons.

I’ll go with my Dean Ave rental. There are other ones that are more lucrative, more complex, more interesting and probably sexier. But the reason I’m choosing Dean Ave is because when I did this deal it was the first time that I felt like I had really mastered my little niche of real estate investing. For that reason it is memorable to me.

Picture of the front house when I bought it in 2015. Looks pretty similar today.Picture of the back unit (mother-in-law) from the back alleyway.

How did you find the deal? Why did the owner sell?

I was driving for dollars looking for vacant houses and I came across this one. The curtains were open and it was obvious no one was living there although it was very tidy.

So, I looked them up through the tax assessor’s records online (where I discovered the house had a legal detached mother-in-law house in the back). I got the owner’s number off of whitepages.com and called them up. They said they were just going to rent it so I said; “well, maybe I’ll rent it then.” My thought was that I might be able to set-up a sandwich lease option.

We met at the house and she gave me the tour. She was older (and turned out to be the wife of the owner of a very prominent business in our community). We talked a little bit about the sandwich lease option idea. It might have gone further except she expressed that she would like to sell. The only problem was that she didn’t want to take the capital gains hit. I mentioned the idea of her taking installment payments (aka seller or owner financing) on the sale to defer the capital gains. Fast forward, I now own the house.

[Chad: There are SO many helpful lessons in this story. First, it shows a technique for finding deals that I recommend ALL the time (driving for dollars). It’s the fastest, most direct way to get out in a neighborhood and find deals. Second, Anthony simply called the owner. How many people find interesting opportunities and never simply reach out to ask a question? Third, Anthony demonstrated what I consider TRUE negotiation. In other words, he wasn’t haggling. He was problem solving and figuring out a way to serve the property owner. In the end, his creativity and trustworthiness led to a win-win situation that helped the owner and also helped Anthony. Beautiful!]

How did you finance the deal and raise down payment funds?

$315,000 was carried by the seller at 4.6% on a 30 year note with a balloon (they wanted to receive exactly $1,200). I borrowed $50,000 at the time from a friend at 7% for the down payment and repairs. I paid him back about 12 months later with the proceeds from a flip.

What has been the overall effect of this deal on your life? Lessons learned?

Well, like I said, I like this one because it made me feel like I’d arrived. I’ve done deals that cash flowed better (I’ve ALSO done worse). But I liked this deal because the seller got a really fair price and was put into a situation that she was very happy with. At the same time, I received a great house in a great neighborhood that has appreciated well while rents went up.

What I learned from this deal was that all the work I put into getting educated and all the experience I’d gathered after years of working through deals had finally become second nature to me. I’d put together an amazing deal where everyone had won. The experience was rich because of the relationship I created with the seller. And I was able to navigate (and even anticipate) all of the complexities and intricacies. It was a really cool feeling and my confidence (and, coincidentally, my success) has been much higher ever since.

[Chad: Amazing! Well done, Anthony. I just love that evolution of confidence and competence you demonstrated. But most importantly for all of us learning from this, you had to stick with all those frustrating “failures” in order to build this level of success. I’m repeating myself from earlier, but it’s such a key lesson.]

Personal Growth/Development

The good life

Do you have any tools that help you manage your life, like a physical planner or digital software?

What does a typical morning routine look like for you?

Wake up at about the same time my wife and kids do. Eat and drink coffee. Hangout with the family for a little bit. Get ready. Take my son to school. Drive to the ocean and park my truck. Meditate/breathing for 5 minutes. Read and journal for 20-30 minutes.

Right now I’m enlisted with a personal coach, and that has lead to great personally productivity and life engagement. So, currently I’d go with that. Ask me at another time in the past or future and I might say either journaling or reading or a combination of both.

[Chad: I’ve also benefited a lot from personal coaches and mentors. Perhaps it’s something I need to get back into as well!]

[Chad: Thanks for the shout out Anthony! Both Anthony and I benefited greatly from studying under Greg Pinneo. I was fortunate enough to meet and take classes from Greg early in my career. In particular, most of what I learned about negotiations, seller financing, and real estate acquisitions came from him.]

What are your favorite books, blogs, or authors? Can be categories in business, investing, or life/philosophy (other than a sacred book)?

So many good ones and many seem to have a place at different stages of life. But, here are some favorites I pulled off the shelf.

Darren Daily is a good “daily dose” type of thing if you’re looking for that. I’m not really a big blog guy though.

What legacy do you want to leave personally and in your career?

My legacy, right now, is in making my kids into positive people. Trying to be someone that makes my wife’s life better. Connecting with people and building a sense of community.

[Chad: Love it!]

Final Advice For Other Investors?

Anthony and his wife Michaela watching their Washington State Cougars

Any big mistakes you’ve made that others should avoid?

It’s a balance between smart and scared. But don’t buy something unless you’re confident you’re making a wise decision. Passing up on a deal might slow you down a little bit at first. But deals that go south can slow you waaaaaaay down or worse – like taking you out of the game completely. Don’t be afraid to pass on a deal, watch what happens with it and see what you can learn. Wholesaling is a great way to capitalize on a potential deal without taking on the risk if you’re unsure.

What advice do you have for a young person just considering their future career and life as an adult?

Keep expenses as low as you can for as long as you can. And focus on getting educated.

I always looked at my commitment to real estate investing as my post graduate degree. Even though I wasn’t getting a piece of paper at any point, I was investing a lot of money to become an expert on something. You might even just look at what a master’s degree would cost you and plan on investing that same amount of money in quality education (seminars, materials, workshops, etc). Even the mistakes you make where you might lose some money can be chalked up to tuition since “experience is the best teacher”.

[Chad: Such a good point. Education and growth has been the foundation of my own progress as well. It’s why I’m so enthusiastic about giving back and sharing here in coachcarson.com. And I love your point about looking at your early years in real estate like a graduate degree. As long as you’re not risking a big loss, that’s a reason to not worry about being perfect on your first deal. You’re bound to make mistakes (i.e. learning opportunities), and you’ll get better with time.)

Any final tips for others looking to invest in real estate and achieve financial independence?

My experience leads me to believe it all begins with desire. If you truly have a burning desire to do anything, then that desire will motivate you to take action, discover the questions you need to ask, and find their answers.

So, if you have a desire and a dream just commit to making everything you do from this point forward move you in the direction of that dream.

Similarly, you can create a timeline, but I don’t think you should get too attached to it. Reason being, you can only control outcomes only so much. Trying to do so can drive you insane. But you can control your efforts 100%.

For this reason I think you should use the timeline as a way of setting benchmarks and short term goals. These short-term timelines simply get you to the long term goals, but they shouldn’t be a gauge for success or failure. I think there is wisdom in the saying, “there are no unrealistic goals. Only unrealistic timelines.” (I’ll credit Ron Taylor but…. he probably stole it from someone)

Anything else?

Lastly, enjoy the process. One time, Greg Pinneo told me the story about a 21 year old investor. This young person was lamenting to Greg’s mentor Abie Label about how discouraging it was trying to make it in real estate. He just wasn’t finding the success he’d hoped for.

The short version of Abie’s reply was, “you’re having the time of your life and you don’t even realize it.”

The journey can come with stress, constant defeat, and disappointment. But it wouldn’t be very exciting or much of an adventure without those things. Recognize that you’re embarking on an adventure and enjoy it as such. You will likely look back on what will turn out to be a relatively short period in your life. And it could be one of the most rewarding and character shaping periods of your lifetime.

[Chad: Wow. It was a pleasure to get your wisdom and perspective Anthony! Thank you for sharing. Getting a behind the scenes tour of your journey from initial frustration to eventual results will be extremely helpful for everyone who reads it.

Have you ever been stuck initially only to find success after persisting? What was your experience like? Do you have any questions or comments for Anthony? We’d love to hear from you in the comments below.

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Comments

Anthony mentions his daily activities- they seem very relaxing.
Are we to take from this that he doesn’t self mange his properties and he uses a property management company?
Does the extra expense make it worth it?

Hey Ryan. I self-manage. I’d recommend everyone self manage to start, at least. You can always employ a manager later if that’s what you decide to do. Property management doesn’t have to be that time consuming if you have a reliable handyman though. Also consider, what if you just bought enough performing rentals to where you can make that decision without worrying whether or not it is “worth it”? Instead making the decision based on whether or not you “want to”. One property at a time though. You’ll get there.

Great interview! Lots of nuggets here…. Here are some of the main takeaways for me. You’ll see a common theme- has to do with facing a stressful situation with a property right now!

1. “You never know when the missing component is going to click but an unrelenting dedication to your goals has to be met with results eventually. I always felt that if someone else could do it, I could do it.”

I sure hope so! I, too, feel I am quite capable of being successful at this, but so far the results haven’t been all that great. I know I need to keep plowing and try different things until I find the right fit. It’s kind of scary to do in practice when there is so much money involved.

2. “Don’t buy something unless you’re confident you’re making a wise decision. Passing up on a deal might slow you down a little bit at first. But deals that go south can slow you waaaaaaay down or worse – like taking you out of the game completely. Don’t be afraid to pass on a deal, watch what happens with it and see what you can learn.”

This! So much wisdom here. I have always heard and read (and usually practice…. except when I allow myself to be convinced by someone “more experienced” than I am) to listen to your gut. This house that I am trying to get rid of right now is one that I didn’t have a good feeling about and resisted buying for a while- but the seller’s realtor was harassing my realtor, who in turn relayed “just how motivated” the seller was and what a good deal this property was…. I bought it, and it has been nothing but a money pit. I am quite sure I’d be much further ahead in my investing (both in # properties and money in my pocket) if I had sat out this “great deal.”

3. “Create a timeline, but… don’t get too attached to it. Reason being, you can only control outcomes only so much. Trying to do so can drive you insane. But you can control your efforts 100%.

For this reason I think you should use the timeline as a way of setting benchmarks and short term goals. These short-term timelines simply get you to the long term goals, but they shouldn’t be a gauge for success or failure. I think there is wisdom in the saying, “there are no unrealistic goals. Only unrealistic timelines.””

Interesting thought. I do have a timeline, and I will say that I am already waaay behind on it! Five years to financial independence isn’t looking too promising right now… I have already resigned myself to extending it. Maybe I need to focus more on the goals and less on the timeline.

Thanks for sharing your experience– it is encouraging to read that one can still succeed despite the hiccups!

Don’t fret, Patsy. A 5-year transition to retirement is a worthy pursuit and possible but it is lofty. I’ve been there and it can be frustrating not getting the results you wanted. Just keep working and always searching for ways to accelerate (responsibly, of course). Even if it took you 10 years you are still light years ahead of most of the population.

Thanks for the encouragement and perspective! Very true that even if it takes me twice as long, the key is that I am working on it and reaching for it! Much greater chance of reaching it than if I am not trying at all, right? 😉

Thanks for sharing. That was an enjoyable read. Curious if Anthony would be willing to share how many doors he owns and the average monthly net per door? Totally understand if he’d rather not. Cash on cash return on that example deal is super juicy and a nominal amount that makes it worth while. Also pretty cool to see that he purchased basically using none of his own money. One of my favorite things about real estate is the creative ways to put together deals and ways to finance them. Is the balloon on that deal due in 30 years or sooner?

Hey there, Jerry. I currently have 20 doors and I buy and hold just about anything that covers PITI, 10% for my management time, 10% for repairs and 12% on any funds I invest on the deal. I’ve found that is a formula for staying in the game and sometimes you can do much better. That particular deal is on a 30 year balloon but I’ve done a lot of 10 year notes. I have lots of thoughts on balloon length but I’ll just say; strongly consider your exit strategy(s) before committing to a term.

Very cool! Thank you for answering and breaking it out. I like the shorter loan terms as well; better rates and builds equity much faster. Downside is obviously the reduced cash flow, but I still totally worth it if one can make it work.

Yeah balloon could be dangerous if rates rise too much, but in 30 years inflation should have chipped away at your remaining balance.

Thanks for sharing. Love love love your last advice. I’m embarking on my first year of full-time real estate investor. I’m having the time of my life, yet the disappointment, defeat, and stress sometimes cloud it. Thank you for bringing it back to the forefront.

Another great article loaded with helpful lessons. I relate to this on many fronts. I have my own company, 10 rentals and love stretching into new territory. My rentals are a bit diverse and enjoyed your response on your criteria immensely. Thanks for sharing!

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